Chris Gibson: Stop fiscal madness

Lack of political will to control spending by government threaten's nation's future

chris Gibson, Commentary

Published
6:00 pm EST, Saturday, January 20, 2018

The Dow is at record highs. GDP is now over 3 percent. Unemployment is at 17-year lows. One might imagine America is poised for a new golden age.

However, these encouraging signs conceal real and present systemic economic dangers. Without a significant course correction, the United States is heading towards bankruptcy, which would mean the end of the republic as we know it. It's coming fast and could be upon us inside of a decade, threatening our exceptional way of life even as we near the 250-year celebration of its inception — the signing of the Declaration of Independence.

Both major political parties are to blame for this condition. Beyond the fiscal, we also suffer a leadership deficit. There is still time to resolve our crises and get back on solid fiscal footing, but this will only happen if we the people demand it of our leaders. Without that pressure, politicians (in both parties) lack the will to do what must be done. Even as we approach this existential precipice, they continue to one-up one another, making promises to give us more of what we simply don't have. They won't talk straight to us that the only way out of this mess will require our best effort and some pain and sacrifice from all of us.

Still, perspective can provide a bright side: the pain brought on by inaction would be far worse. Indeed, everything is at stake.

The American Dream has always meant both the individual pursuit of happiness and setting up our children and future generations to be better off than we have it. Yet today, we (baby boomers and Gen Xers) run the risk of being the first generations to leave our kids in a worse position than we inherited. Thus, enacting necessary reforms is as much a moral imperative as it is an economic one.

Our present situation is daunting. We are already over $20 trillion in debt. Consequently, we pay nearly $500 billion in annual interest costs just to service that debt. That is an onerous opportunity cost for a society with so many competing priorities: providing for national security, fixing roads and bridges, investing in the education and training needs of our young, and fulfilling sacred obligations to our senior citizens. Every dollar spent on interest comes out of programs like these and without major changes, annual interest payments alone will be over a trillion dollars within a decade — this at a time when interest rates are historically low. If the economy heats up and we see noticeable inflation over the next couple of years, interest rates will likely rise significantly, resulting in further spikes in debt servicing costs and irreversible debt accumulation until bankruptcy. History has not been kind to nations that operate in this way. Most recently Greece experienced a debt spiral in 2010, causing their economy to crash and bringing widespread misery to their people.

Addressing this crisis and getting back to a balanced budget was among my top priorities while serving in the Congress. The political circumstances were challenging because President Barack Obama had different priorities, and he was committed to a Keynesian economic philosophy that believed significant government spending was the answer to our economic challenges. Still, the resolve of the new Republican Congress in 2011 made a positive difference. Over the six years of divided government that followed, working together (often coercing President Obama) we reduced the annual deficit by almost two-thirds, from its height over $1.4 trillion in 2010 just prior to my election to about $580 billion (still too high) as I was departing the U.S. House following my self-imposed term limit.

Not surprisingly, most of this deficit reduction was unpopular, coming by way of forced fiscally conservative budgeting required by the Budget Control Act of 2011 (which I voted for), new revenues brought on by the sunsetting of Bush-era taxes for Americans making more than $450,000 a year in January 2013 (which I accepted), and growth in the economy (the popular part) that resulted in more money flowing into the treasury. Bottom line — we were making marked progress getting back to a balanced budget.

Unfortunately, in 2017 under unified Republican government, we went in the wrong direction. Spending went up, increasing the deficit. It is now apparent this disturbing trend will continue for the balance of President Donald Trump's term. We are presently on course to return to over $1 trillion deficits starting in 2020. While the primary cause of this reckless position has been excessive spending, especially in runaway mandatory programs, the tax package just enacted will exacerbate this already dire situation. There's no question the tax bill will help grow the economy but even with rosy growth projections, the tax bill will still add over a trillion dollars to the deficit over the next decade according to the nonpartisan Joint Committee on Taxation. Meanwhile, the Committee for a Responsible Federal Budget assesses the true costs may exceed two trillion dollars.

These unsustainable budgeting practices must end. It's very clear — we must change course now.

In 2012, 38 of us in the U.S. House of Representatives (16 Republicans and 22 Democrats) voted for the Cooper-LaTourette budget, which was informed by the recommendations of the Simpson-Bowles Deficit Reduction Commission. I consider it among the best votes I took while in Congress. Had we enacted that compromise budget then, we would already be at a balanced budget now, which could have enabled a shift in political focus to enacting a balanced budget amendment to the Constitution to ensure future Congresses kept us there.

This Cooper-LaTourette bipartisan budget faced down all the hard choices. It included disciplined spending allocations for the federal departments, directed reforms to mandatory spending programs to realize necessary savings, and included additional revenue projections from directed pro-growth tax reform where loopholes were to be closed to both reduce the deficit and lower tax rates for middle class workers, thereby driving increased consumption that subsequently would increase revenues — all of which would help get us back to a balanced budget. There's no doubt about it; this budget is politically challenging as compromises are required from both parties, but the payoff will secure the American Dream for the next generation. We must summon the will to get it done.

More Information

Chris Gibson, whose column will appear monthly in Perspective starting today, will discuss his book "Rally Point" at the next Times Union Leadership Luncheon hosted by Editor Rex Smith at 11:45 a.m. Wednesday at the Hearst Media Center in Colonie. Registration will be open through Monday at http://TULeadershipLuncheon.eventbrite.com or by phone at 518-454-5479.

It's very simple. In the next several years we will need to enact the Cooper-LaTourette budget, or something like it, or we too will face the debt spiral. There is no escaping the coming reckoning.

Chris Gibson is a former U.S. representative for the 19th District. A 29-year veteran of the military, he served four combat tours in Iraq. He is currently the Stanley Kaplan Distinguished Visiting Professor of American Foreign Policy at Williams College and the author of "Rally Point: Five Tasks to Unite the Country and Revitalize the American Dream," a book published by Twelve in October 2017.